If an Investment Accounted for Using the Equity Method Suffers

question 36

Multiple Choice

If an investment accounted for using the equity method suffers an impairment loss and the value in use of the investment subsequently recovers, what accounting entry should be made?

• A) None; once an investment has been written down, it cannot subsequently be written up.
• B) It may be written up in value but not more than the amount of the impairment loss that was recorded at the time of impairment.
• C) It may be revalued to fair value with the revaluation gain going to net income, even if the recorded gain will exceed the original impairment loss.
• D)It may be revalued to fair value with the revaluation gain going to other comprehensive income, even if the recorded gain will exceed the original impairment loss.

---

Definitions:

Farm Expenses

Costs associated with the operation, maintenance, and management of a farm, including but not limited to feed, seed, fertilizer, and equipment maintenance.

Total Income

Total Income refers to the combined sum of all earnings, receipts, and gains of an individual or entity during a specific period, before any deductions are made.

Chapter 7 Bankruptcy

A legal process that allows individuals or businesses to discharge most of their debts under the bankruptcy code, liquidating assets to pay off creditors.

Cash Advance

An option that allows credit card holders to withdraw a certain amount of cash immediately, often at a high interest rate.